Swiss fund for retirement today

Investing / Portfolios
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Hello,

first, apologies: I’m not in Switzerland so my understanding is limited - but I do have decent understanding of the FIRE/mustachian philosophy (and am (trying) to set it up for myself).

My questions are rather on behalf of my mother, age 65, who lives in Switzerland.

She has ~250,000 CHF of “flexible” cash to play with. So her timescale is very different from most of what I see here. She doesn’t need to begin drawing that down from that now, but may want to begin in the next few years.

  • If she were based in UK, I would likely advocate something like the Vanguard target retirement funds or LifeStrategy.
  • I saw on moneyland.ch that she can get a savings account with a 0.5% return.

Here in the forum and on the blog, I have seem mentions on 3A (I think she is too old for that), Swisscanto and VZ. Because she lives in Swiss Francs and the world stock market currencies are a bit crazy these days, I feel that she it would be too risky to rely heavily on a world index tracker.

  • Is there a low risk “all-in-one” fund along the lines of e.g. 20% Swiss Stock, 80% swiss bonds thing that you feel would be relevant?

I’m happy to hear anything you might have to say. Thanks :slight_smile:

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I think many people underestimate how long they might live with modern medicine and biotech. So I’d still propose to plan for the long term and buy some reasonable world index fund with some percentage of savings, depending on risk preference

Which is like at inflation level - 0.5% y/y? Savings accounts hardly made anyone rich, except maybe the banks.

But still, if you’re going to keep cash in a portfolio as a counterweight to market downturns, you’ll need a savings account nonetheless to put it on (or a few, consider the protection limit of 100k per bank). And 0.5% is not so bad when almost every bank pays 0% now. Check for the catches in that account’s conditions!

Yep, too late for any of that

For the right price, currencies can be hedged out. It’s as easy as buying ETFs with “CHF hedged” in the name. Problem is the price is a little steep, are you willing to pay 2+% p.a. for hedging? There’s no free lunch, take the risk or pay protection. Another problem is the SNB, who can sell off the frank at will - like just last week!

[quote=“yaw, post:1, topic:404”]
Is there a low risk “all-in-one” fund along the lines[/quote]
Pillar 2 buy-in might have been a good low risk option, which would have given her a 6.8% annuity. But it’s waaay too late too. I think the cutoff for buyins starts even at 50 or so. Real estate is also usually a nice steady income source, but things are getting pricy, and with 250k and no job you won’t be buying anything.

Like Néstle who have maybe only a couple percent of total sales in Switzerland? Heh. Swiss stocks are a bigger gamble on currency that it seems at first sight.

Everything relevant has already been bought up by central banksters en masse with yields driven into ground. Shop around, have a look yourself, - https://www.six-swiss-exchange.com/bonds/explorer_en.html - hardly anything yielding over 1% worth investing in. After diversification which would average down these already not great yields, fund’s expenses, her own trading expenses (hello swiss stamp duty 0.075%*2) and taxes she’s not going to beat even that 0.5% savings account you mention. Hoard cash instead of bonds.

(On the other hand, it’s the same central banksters that she has to thank for that the inflation didn’t snack on her life long retirement savings so far…)

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Thanks @hedgehog for the interesting perspective. I hadn’t considered a few of the things she’s said.

Ok so she’s (before talking to me), put 100k in UBS Manage TM (CH) and 50k in BCV Strategie Equiponderée.

I haven’t been able to find much info on the UBS thing. But the fees on the BCV apear to be disgraceful (1.75 entry, 1.25% per year, 0.5% exit WTF)
https://fundlab.credit-suisse.com/ch/en/retail/fund/detail/CH0004607823

(she has ~800k real estate investment that gives a decent return).

Can I ask you: where would you put stuff if you were her?

Or what do you think about the following:

Thanks!

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I’d advise to stay away from actively managed funds, especially from any bank. Returns are usually mediocre and fees are too high. Active managers as a whole have tended to underperform passive in recent decade.

There are some managers worth their fees, but most aren’t. A random one from a bank most likely isn’t. Far better and cheaper to just buy an index fund, which is easy today

Something like 50-60% in passive world index fund like VT and rest in CHF cash.

Total returns matters more than dividends in equity investment. I’d argue dividends even hurt it - it’s cash that companies don’t get to reinvest internally and you have to invest yourself at market prices which is much less efficient: you have to pay taxes on them and buy equity at P/B well over 2-3x on average

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That’s what I’m doing at the moment and I think it’s a reasonable approach. My situation is a bit different though. As I’m 29 and I seek for FI, I’ll move to 80% stocks and 20% cash (+ gold and maybe bonds in the future).